...Larissa Galberth Financial Statements Paper Part 1 University of Phoenix ACC/497 Bob Davis Proper interpretation of the information found in a company’s financial statements is vital for everyone affected by the actions of the company. Those affected include potential investors and current stakeholders, including stockholders, employees, vendors and lenders. All of these people must be able to make business decisions based on information found in financial statements. This paper will identify the purpose of financial statements based on the information found within the financial statements of the Home Depot. What does the income statement tell you about the company? Why is the statement important? What business decisions could be made using the income statement? Often referred to as the profit and loss statement an income statement is a document used for determining profitability. It shows a company’s revenue, gross margin, operating expenses, total expenses and net income. Shareholders continuously inspect the income statement of companies in which they have invested interest to ensure that their investment remains strong and profitable. The Home Depot 2008 income statement shows that this is a company with strong sales with $70 million in sales per year. Although the Home Depot is a strong sales company the income statement shows that there was a substantial drop in sales in 2009 as opposed to previous years. This statement is important to investors and lenders. Seeing...
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...Financial Statements Paper Part I ACC/497 March 7, 2016 Financial Statements Paper Part I Financial statements allow users to view company performance, analyze past trends, project future performance, and make essential business decisions regarding investing into the enterprise. The consolidated statement of earnings, balance sheet, and statement of cash flows are a few of the reports users may look to find crucial information regarding the business. Reviewing The Home Depot's financial statements offers a glimpse into how the company performed during the 2008 and 2009 fiscal years and what business decisions should be made based upon the company's reports. Consolidated Statements of Earnings The consolidated statement of earnings, the income statement, displays relevant business information to users to predict future cash flow by evaluating past trends of a company, forecasting future performance, and assess risks of achieving future cash flows (Kieso, Weygandt & Warfield, 2013). The income statement contains elements such as revenues, expenses, gains, and losses. In Home Depot’s income statement information depicts a steady decline in gross profits, operating income, net earnings, and earnings per share, while they reported an increase in operating expenses. Gross profits declined from 2007 to 2009 from $26.5 billion to $23.9 billion. Operating income decreased by half from $8.8 billion to $4.3 billion in 2009. Net earnings dropped from $5.8 billion to $2...
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...CONFORMING LETTER Home Depot Inc. Dear Home Depot Inc. Management, As a partner of KNAM LLC, it is my pleasure to present you with the results of our initial review. Included with these results is our assessment of Home Depot Inc.’s performance is our proposition of areas we’d like to review further to determine improvements, efficiency, functionality, and health of your organization. Background Your organization’s core service is in the DIY home improvement market. You sell goods that consumers need for home improvement as well as advice on said projects, contracting services, lawn and garden, and appliances and tools. Your organization was founded in 1978 with the purpose of providing DIY one-stop shopping. Since inception, Home Depot Inc. has grown to become a multinational company with foundations strongly in the United States with roots in the Canadian, Mexican, and Chinese markets. Shortly after inception, Home Depot Inc. enlisted on NASDAQ and the NYSE. Your company has seen considerable growth in its main business as well as developments in subsidiary businesses and services. Home Depot Inc. has become one of the fastest growing retailers in America and as such, you would like to review the operations of your organization to determine areas of further growth and areas that may need to be leaner. Objectives of the Operational Review As a result of our initial review and interviews with your executive management...
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...Home Depot, Inc.: 2011 10-K Analysis Ralph Fisher III Albright College: ACC 912 2/28/13 Final Project The Home Depot, Inc. fiscal year for 2011 ended on January 31, 2012, and their 2011 10-K report was produced to the Securities and Exchange Commission thereafter. After review of the key financial statements, it was found that the balance sheet, income statement, cash flow statement, and stockholders’ equity statement remained consistent over the documented years. All figures reported below are in millions except for per share values, ratios, and percentages. The balance sheet reported on Home Depot’s 2011 10-K report analyzes both 2011 and 2010 fiscal years. The working capital for the two years amounted to $5,144 and $3,357 in 2011 and 2010 respectfully. The quick ratios amounted to 1.55 in 2011 and 1.33 in 2010, showing sufficient current assets to cover the current liabilities reported. The quick ratio was determined to be .34 in 2011 and .17 in 2010 showing a tremendous shortage in cash and cash equivalents, and receivables to cover short-term debts in the immediate future. Upon further review of the current assets, it was found that Merchandise Inventories make up 71% of current assets in 2011 and 78% of current assets in 2010, which could potentially pose an issue on how quickly these assets can be converted to cash to settle short-term debts. However, Home Depot declared in their supporting notes that their inventory is evaluated on a quarterly...
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...his case follows the performance-review and financial-statement-forecasting decisions of a Value Line analyst for the retail-building-supply industry in October 2002. The case contrasts the strong operating performance of Home Depot with the strong stock-market performance of Lowe's. Students examine a financial-ratio analysis for Home Depot that acts as a template for generating a comparable ratio analysis for Lowe's. The student ratio analysis is designed to build intuition with respect to interpreting individual ratios as well as ratio interrelationships (e.g., the DuPont framework). The historical-performance comparison suggests that investors are skeptical of the ability of Home Depot to maintain its performance trajectory, yet they project sustained improvements for Lowe's. Students are invited to scrutinize the analyst's five-year income-statement and asset-side balance-sheet forecast for Home Depot. The case expressly focuses on the asset side of the balance sheet as a preview for other cases using free-cash-flow forecasting. The Home Depot forecast exercise exposes students to the mechanics of financial-statement modeling and sensitivity analysis, which they can use in building their own forecast for Lowe's. Finally, the strong-growth assumptions for Home Depot relative to the modest-growth forecast for the industry suggest that the company can be expected to capture massive and perhaps unreasonable market share in the near term. The exercise provides a striking example...
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...Audit of Home Improvement Retailors Home Depot and Lowe’s are both large successful home improvement retailers. This paper discusses the background of both companies and goes into detail about the financial ratios including profitability and liquidity ratios. The paper also discusses business risks, audit risks, and the proper audit procedures that are necessary. The paper focuses on audit procedures of three important asset accounts: Cash, inventories, and accounts receivable. Team Members: Julie November Shuai Guo Wenqian Zhu Yusi Zeng Zongxian Wang Background Yusi Zeng No matter if customers are a homeowner, renter, or Pro customer, as long as they are creators and want improve their houses, they would seek quality tailored experiences, and are on the lookout for new ideas to improve homes. The home improvement industry or hardware stores, in terms of public companies was an industry once ran by smaller companies and is now dominated by some of the largest retail companies in the world. DIY or do it yourself has become the business and in the United States Home Depot and Lowe's are the two largest competitors and are currently changing the landscape of the industry. Both of them are among the the many businesses, including home centers, paint stores, hardware stores, lumber yards and garden centers. The industry growth is very limited, and very slow...
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... You work in the corporate finance division of The Home Depot and your boss has asked you to review the firm’s capital structure. Specifically, your boss is considering changing the firm’s debt level.Your boss remembers something from his MBA program about capital structure being irrelevant, but isn’t quite sure what that means. You know that capital structure is irrelevant under the conditions of perfect markets and will demonstrate this point for your boss by showing that the weighted average cost of capital remains constant under various levels of debt. So, for now, suppose that capital markets are perfect as you prepare responses for your boss. You would like to analyze relatively modest changes to Home Depot’s capital structure. You would like to consider two scenarios: the firm issues $1 billion in new debt to repurchase stock, and the firm issues $1 billion in new stock to repurchase debt. Use Excel to answer the following questions using Eq. 14.5 and Eq. 14.6, and assuming a cost of unlevered equity (rU) of 12 percent. Obtain the financial information you need for Home Depot. Go to www.nasdaq.com, click “Summary Quotes” on the left-hand side, and enter Home Depot’s stock symbol (HD). Click “Go.” From the Summary Quotes page, get the current stock price and number of shares outstanding. Click “Company Financials” and the annual income statement should appear. Put the cursor in the middle of the statement, right-click your mouse, and select “Export to Microsoft...
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...Home Depot Patsakorn Niruntasukrat Mahidol University International College Preparation Center for Language and Mathematics February 27, 2014 Home Depot Foundation's Sustainability Obama stated that “It is not a choice between our environment and our economy; it is a choice between prosperity and decline” (“Sustainable Development Strategies”, 2009). Sustainability means the balance of three things which are steady business, society and friendly environment. In other words, businesses must show crucial responsibility in terms of environmental impacts and social responsibilities. Consequently, businesses must utilize natural resources carefully, and the economic growth and employment rate of businesses must be increased (“Understanding Sustainability”, n.d.). Therefore, sustainability is an aim of businesses. The Triple Bottom Line or TBL is a significant tool advocating sustainability goals. The concept of TBL emphasizes three things, which are healthy communities (people), clean environment (planet) and stable profitability (profit) (“Slaper & Hall”, n.d.). In contrast with the past, many businesses, nonprofit organizations and government entities tend to follow this guideline. Home Depot is one of the best examples of companies which are following the TBL standard. Home Depot is the world biggest home improvement retailer (“Did You Know”, n.d.). The company was established by Bernie Marcus and Arthur Blank in 1978. The first two stores opened on June 22...
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...THE HOME DEPOT, INC. Introduction 1. Identify the company’s mission, vision, and primary stake holders. 2. Identify the five forces of competition and how it impacts the company. 3. Create a SWOT analysis for the company identifying the major strengths, weakness, opportunities and threats. 4. Based on the SWOT analysis, recommend how the company may capitalize on its strengths and opportunities, and minimize its weaknesses and threats. 5. Discuss the various levels and types of strategies the firm may use to maximize its competitiveness and profitability. 6. Determine the recent corporate governance issues that are currently affecting the company’s decisions and report how the company is or should be handling the issues. 7. Use 4-5 external sources as part of your assignment. Introduction Home Depot, Inc. is the world’s largest home improvement retailer with 2,246 retail stores in all 50 states in United States, the District of Columbia, Puerto Rico, Virgin Islands, Guam, 10 Canadian provinces, Mexico, and lastly China. HD (Home Depot) provides employment to approximately 321,000 full time employees. HD stock is traded on the New York Stock Exchange (NYSE:HD), is included in the Dow Jones industrial average and Standard & Poor’s 500 index. This company sales a range of building materials, home improvement and lawn and garden. (Poor's, 2011) Home Depot was found by Bernie Marcus and Arthur Blank, on June 29, 1978. Their vision was to create and...
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...Home Depot Data Breach Background on the 2014 Home Depot Data Breach Home depot was the target of a cyberattack on their information system infrastructure that lasted from April of 2014 to September of 2014. As a result of the attack and following data breach, 56 million credit-card accounts and 53 million email addresses were stolen. (“Home Depot Hackers Exposed 53 Million Email Addresses”) The cyberattack involved several steps. First, the attackers gained third party credentials allowing them into the system. Next they exploited an unknown weakness in the system that allowed for the attackers to elevate their own access privileges. Finally, they installed malware on Home Depot’s self-checkout systems in the U.S. and Canada, allowing for the data to be stolen. Because this was a multistage attack, there were several stages of failures. While this shows that there were multiple lines of defense, the fact that there were multiple failures as well is a large issue. It demonstrations that even with multiple lines of defense Home Depot was still not adequately protected. The first failure was that the attackers acquired credentials from a third party vendor. This may not have been Home Depot’s fault directly, but there are still governance processes they could’ve employed to prevent it. Once the attackers were in the system they exploited yet another vulnerability that allowed themselves to elevate their access rights. The third vulnerability that was exploited was the lack of...
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...ACC/421 Full Disclosure Paper Disclosure is information regarding an activity of financial records that creditors, investors, and humans should know what when on in the company or organization regarding the finances increase or decrease. This includes strikes in the company, major fire, theft, a bad product, or a product that is at a high-demand regarding the time of year. Hurricane season in Houston a few years back. The weather reporter states that Houston, Texas is at threat of developing a hurricane, which will hit a specific area. The area has to prepare for the bad storm. The people in the area may have to leave their homes or stay and ride out the storm. The majority the people will go to Lowes or Home Depot to purchase lumber to board up their houses. Some will go to the nearest grocery store to stock up on water, can goods supplies, and items that a person do not have to cook. Others will go the nearest gasoline station to stock up on gas for their cars or generators in case the lights go out. Some go and withdrawal money out of their accounts for the emergency cash. They stated the storm would hit Katy, Texas and head toward Galveston, Texas. This covers a large area. Some people will the full effects of the storm and others just wind. At this time, the stores closed at three o’clock in the afternoon. Gasoline, Wal-Mart, Lowes, and Home Depot sold out of all items need to survive for the storm. Even the fast food places sold out of food in...
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...For the exclusive use of D. Xiang, 2015. 9-200-044 REV: JANUARY 15, 2002 LISA MEULBROEK Kmart Inc. and Builders Square Introduction In July 1997, Kmart appeared to be nearing a year-long effort to sell its faltering Do-It-Yourself (DIY) home improvement chain, Builders Square. Leonard Green & Partners, a Los Angeles-based retail buyout firm, had proposed to buy Builders Square (BSQ) and merge it with Hechinger’s, a Washington, D.C.-based DIY chain that had been a pioneer in the retail home improvement industry. The newly-formed Builders Square-Hechinger combination would create the nation’s third largest DIY retailer, and seemed to be one of the few options left to Kmart. Kmart’s CEO, Floyd Hall, had a difficult decision to make: should he move forward with Green’s offer of $10 million for Builders Square, or should he continue the search in hopes of receiving a higher offer? Green’s offer seemed surprisingly low, even given Builders Square’s recent sub-par performance, yet bidders for Builders Square had been slow to materialize. Indeed, Kmart’s recent talks concerning a joint venture with Waban Co.’s HomeBase centers ended when Waban’s management withdrew without explanation. As the decision neared, Kmart’s options seemed limited and time was short. Kmart and its Entry into Specialty Retailing Kmart Corporation, one of the world’s largest mass merchandise retailers, began as the S.S. Kresge Company in 1912 and by the 1950s it was one of the largest...
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...Md. Anamul Habib Student Number: 213869201 Email: anamulhabibsohel@gmail.com Reading Assignment on “Director’s Pay, General Governance, and Red Flags” The philosophy of Home Depot with respect to director compensation is to align the interests of non-employee directors with the interests of their shareholders. To implement this philosophy, their Corporate Governance Guidelines provide that the annual retainer for non-employee directors must be at least two-thirds equity. The Company presently provides 82% of each director’s annual retainer in Company equity. Furthermore, consistent with their Corporate Governance Guidelines, director equity awards stipulate that shares of Company stock must continue to be held until the director retires from...
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...Predicting Financial Stress 2014MAY – FSA712 Final Project Abstract This research paper will discuss methods used for measuring and predicting financial stress for business enterprises. The accounting literature includes several financial stress prediction models, the most common of which are the Altman Z-Score and Ohlson O-Score. The role of the above models is to focus on the use of financial ratios, earnings measures, market values and cash flow. Models that predict the financial stress of companies can be used as early warning tools meant to direct a company’s management to take necessary corrective action before the company goes into financial difficulty and eventual bankruptcy proceedings. This paper specifically will discuss and analyze the three main financial stress prediction models, the Altman Z-Score, Ohlson’s O-Score and Merton’s Distance to Default. The two selected companies that will be analyzed are Home Depot and Lowes’ Company. The Home Depot, Inc. operates as a home improvement retailer. The Home Depot stores sell various building materials, home improvement products, and lawn and garden products as well as provide installation, home maintenance, and professional service programs to do-it-yourself, do-it-for-me, and professional customers. The company offers installation programs that include flooring, cabinets, countertops, water heaters, and sheds, as well as act...
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...the Customer Experience at Home Depot Rev. 12-2012 During 1990’s, the Home Depot was well renowned for its orange-blooded entrepreneurial culture and outstanding customer service. From the beginning, the retailer took a long-term approach by training its associates to form enduring customer relationships rather than push for incremental sales gains. As a result, the company grew very quickly becoming the fastest retailer in history to reach sales milestones of $30 billion, $40 billion, $50 billion, $60 billion and $70 billion in revenuesi. Despite this remarkable success, Marcus and Blank, the founders of the Home Depot, stepped down as leaders stating that continued growth required new leadership with fresh and innovative business approaches. Thus, in 2001, Robert Nardelli was named Chief Executive Office of the Home Depot. Nardelli introduced many new initiatives to the company such as, centralized buying, company-wide analytics and improved information systems, which were essential for the company to remain competitive. Many of his other changes, however, led to significant dissatisfaction, low morale, high turnover, reduced productivity, and general discontent among the associates that seriously derailed the company from the customer-centric approach that made the Home Depot such a success story during the Marcus and Blank era. The result was the most dramatic decrease in customer satisfaction in retailing history. In 2001, the Home Depot and Lowe’s both had customer...
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